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Bharat Rasayan Ltd Management Discussions.

INDIAN ECONOMY

While the global economy is battling headwinds, India continues to be one of the
fastest growing major economies in the world in FY 2018-19, driven by strong household
spending and corporate fundamentals. Despite external vulnerabilities in the form of high
oil prices, trade tensions between major global trading partners and the US monetary
tightening, the Indian economy remained resilient. The World Bank estimated the Indian
economy to grow by 7.2% in FY 2018-19.

The reforms undertaken are expected to have a positive impact on the fiscal and current
account deficit over the medium to long term. Additionally, they will increase the
efficiency and transparency of the Indian economy. Together, these will increase the
confidence of both corporates and investors in the Indian economy.

INDIAN AGROCHEMICAL INDUSTRY

Agriculture inputs play a decisive role in enhancing crop production. With arable land
declining, production of crops can only be increased by using quality inputs through a
scaled-up country-wide effort. Concerted efforts are being taken to transform agriculture,
improve farm productivity and farmer prosperity, achieve food security and environmental
sustainability.

Agrochemicals are chemicals that help boost crop productivity through prevention of
destruction of crops by pests such as insects, weeds, fungus, etc. The global economy, in
general, and Indian, in particular, is facing a multitude of challenges such as to feed an
evergrowing population, reducing arable land bank and dealing with adverse climatic
changes. Under such circumstances, the traditional methods of growing more crops are
rendered inadequate. There is a growing acceptance to launch advanced agrochemical
solutions to achieve higher field productivity.

Agriculture which contributes to 16% of the GDP and provides employment to nearly half
of the countrys population, plays an important role in the Indian economy. India is a
leading farm producer as well as an exporter of many agro commodities. Its agro economy
faces multiple challenges which is reflected in the relatively lower productivity compared
to the advanced economies of the world. Science provides solutions to address some of
these challenges and in turn, these provide opportunities for businesses involved in
agriculture inputs.

Indian agriculture is on a growth path, with an increase in investments and private
funding in the past few years. The sector is expected to grow with better momentum in the
next few years, owing to an increase in investment in agricultural infrastructure such as
irrigation facilities, warehousing and cold storage. Factors such as reduced transaction
costs, time, better port gate management and fiscal incentives will also contribute to
this upward trend. Furthermore, the increased use of genetically modified crops is also
expected to better the yield of the Indian farmers.

IMPACT OF CLIMATIC CONDITIONS ON GLOBAL AGRICULTURE

The year 2018 became the fourth warmest on record since 1880, according to an
independent analysis by NASA and the National Oceanic and Atmospheric Administration.
Preliminary data indicated that 2018 global temperatures were 0.79 Degree Celsius above
the 20th century average. The warming was largely driven by increased emissions of carbon
dioxide and other greenhouse gases into the atmosphere caused by human activities.
Unfavorable weather for crops in key growing regions adversely impacted crop production
and yield.

IMPACT OF CLIMATIC CHANGES ON AGRICULTURAL PRODUCTION

As per the India Meteorological Department (IMD), 2018 was the sixth warmest year on
record in India with patchy monsoon and average temperature being significantly above
normal. The rainfall during the annual monsoon season was less than the original forecast
at 91% of the long-term average. Nearly 50% of Indias cultivable farm area is dependent
on the monsoon, making it lifeline of the countrys rural economy and agriculture sector.
However, most major crops producing states witnessed normal monsoon rainfall, hence the
production of food grains for FY 2018-19 is higher.

A number of measures and policies have been introduced by the Government. The
pro-farmer policies will help the cultivators attain higher levels of agricultural produce
and enable a structured income support for them. Agricultures role in the process of
economic growth in India is unprecedented. Agriculture, with its allied sectors, is the
largest source of livelihood in India. Advancement in agriculture and allied sectors is
positive for inclusive economic growth at the national level. India is the largest
producer, consumer and importer of pulses in the world. As farmers find themselves in a
more comfortable situation, the agriculture sector will gather further momentum.

CROP PROTECTION INDUSTRY

Crop protection chemicals play a major role in increasing agriculture productivity.
They help in minimising plant diseases, weeds, and other pests that damage agriculture
crops, and thus increasing and maintaining year-on-year crop yield. Around 25% of the
global crop output is lost due to attacks by pests, weeds and diseases. India is the 4th
largest producer of agrochemicals, after the US, Japan and China. In India, better timing
and spatial distribution of rainfall, higher pest incidence, and steps by the Government
to improve farm income are expected to increase the application of agrochemicals. The
industry faces several challenges due to strict environmental regulations. Crop protection
comprises of insecticides, fungicides, herbicides and bio-pesticides. Indias pesticides
consumption is currently one of the lowest in the world among other economies.

In FY 2018-19, the Indian crop protection chemical industry witnessed several
challenges. Uneven distribution of rainfall and its skewness in certain regions led to a
significant change in the pest load factor, impacting its consumption. In Rabi season,
significant rainfall during beginning of cropping period led to a decline in pest
infestation. The industry further faced the challenge of fluctuation in the prices of raw
materials as supply got impacted due to operational issues in China led by environmental
crackdown.

EFFLUENT MANAGEMENT

We have installed effluent treatment plant. All effluents generated at plant are
segregated into hazardous and non-hazardous categories and they are effectively treated,
recycled and reused, wherever possible.

RESEARCH & DEVELOPMENT

Being actively engaged in product and process development activities across various
segments of its businesses, Research & Development (R&D) is an integral part of
the Companys operations. We have dedicated R&D plant at Bahadurgarh, Haryana is
certified by the Ministry of Science and Technology, Government of India with pilot plant
having a qualified team. We also have R&D Plant at Dahej, Gujarat having NABL
Certification from National Accreditation Board for Laboratories as a certified research
lab, alongwith Pilot plant. Both the plants are working round the clock working on new
chemistries.

QUALITY

In addition to ISO 9001:2015 for Quality Management, the professional commitments of
high order have earned the rating of ISO 14001:2015 for Environment Management System and
also ISO 45001:2018 Certification for Occupational Health & Safety norms. The Company
is also registered with global mercantile data compiler and rating agency Dun &
Bradstreet.

BUSINESS PERFORMANCE

Your Company has highly qualified and dedicated team of professionals in various work
profile to focus on quality improvement in existing products, marketing the products to
prevailing customers and exploring new domestic and overseas customers for the Company.
Your Company achieved a turnover of Rs992.18 crores registering an increase of about
22.43% over previous year turnover of Rs810.40 crores and earned a Profit before Tax (PBT)
of Rs155.13 crores and Profit after Tax (PAT) of Rs111.52 crores.

Apart from loyal customer base that the Company is enjoying since last several years
now, many more new domestic as well as overseas customers are added to the portfolio of
the Company during the year & same is expecting to increase in near future due to
Companys commitment of supplying high quality product in a time bound manner.

Moving ahead, the Company remains poised to implement key initiatives across functions
to enable itself to face market challenges and leverage the emerging opportunities. It
remains focused on improving revenue growth and profitability, driven by high growth
segments such as seeds and nutrients.

EXPENSES

The Companys total expenses increased by 23.26% from Rs679.72 crores in FY 2017-18 to
Rs837.79 crores in FY 2018-19. Major expense items of the Company comprise cost of
material consumed, purchase of stock-in-trade, power and electricity, freight &
forwarding outward, employee benefits expenses, depreciation and amortisation expenses and
finance costs.

Cost of materials consumed increased by 46.86% from Rs493.61 crores in FY 2017-18 to
Rs724.90 crores in FY 2018-19 owing to increase in major raw material prices.

Power and Electricity expenses increased by 8.66% from Rs17.79 crores in FY 2017-18 to
Rs19.33 crores in FY 2018-19, largely due to increase in prices of utilities.

Employee benefit expenses increased by 15.83% from Rs49.52 crores in FY 2017-18 to
Rs57.36 crores in FY 2018-19 owing to increase coming from annual increment and new
recruitment.

Finance costs increased by 42.65% from Rs11.09 crores in FY 2017-18 to Rs15.82 crores,
subject to regrouping as per Ind-AS.

RISKS AND CONCERNS

Risk management comprises all the organizational rules and actions for early
identification of risks in the course of doing business and the management of such risks
along with identification of opportunities. Despite the strong growth drivers, Indian
agrochemicals industry faces challenges in terms of low awareness among large number of
end users spread across the geography. Managing inventory and distribution costs is a
challenge for the industry players in the wake of volatility in business environment. The
performance of the crop protection industry and other agri-inputs is dependent on
monsoons, pest and disease incidences on crops. As this years monsoon failure has shown,
major fluctuations in total rainfall and its distribution affect the crop acreages and
overall productivity and have a direct correlation with sales. Agrochemical companies face
issues due to seasonal nature of demand, unpredictability of pest attacks and high
dependence on monsoons.

Compliance to growing regulatory norms is a continuing requirement and could lead to
delays in obtaining necessary approvals. Changes in guidelines or policies in various
geographies may also lead to sudden disruption of business in specified products.

In order to minimize the risk, a comprehensive and integrated risk management framework
is followed by the Company.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has created internal control systems which are commensurate with the size,
scale and complexity of its operations. The Company has also identified entity level
controls for the organization, covering integrity and ethical values, adequacy of audit
and control mechanisms and effectiveness of internal and external communication, thereby
strengthening the internal controls systems and processes with clear documentation on key
control points. The internal controls are formulated and implemented by the management
with an objective to achieve efficiency in operations, optimum utilization of resources
and effective monitoring and compliance with applicable laws.

HUMAN RESOURCES DEVELOPMENT

The Company invested in a strong workforce and working environment to report
sustainable growth, reflected in the continuous improvement in operating processes and new
product introduction. The Company believes in a performance-driven culture.

The Company organized training programmes based on emerging requirements, covering
technical, behavioral, customer orientation, safety, code of ethics, product training and
other needs. The Company continued to recruit skilled scientific, technical and managerial
personnel.

CAUTIONARY STATEMENT

Certain Statements made in this report relating to Companys objectives, outlook,
future plans etc. may constitute "forward looking statement" within the meaning
of applicable laws and regulations. Actual performance may differ materially from such
estimates or projections, whether express or implied. Important factors that could make a
difference to the Companys operations; include Government Regulations, Tax regimes,
Economic developments within India and countries in which the company conducts business
and other allied factors.

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